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Building material costs rise 6.7% year over year, hurting small builders
NAHB data from its July 2026 Housing Market Index survey found 72.9% of builders saw material costs for the same house increase by up to 15%, with smaller firms (five or fewer starts) facing median cost gains of 9.1%.
Building material costs increased 6.7% year over year for a median standard home, according to new NAHB/Wells Fargo Housing Market Index survey data shared by HousingWire. The median increase in building material costs closely matched producer price input inflation for residential construction, with NAHB noting that the July Producer Price Index showed goods used in new construction rose 6.7% over the year.
HousingWire reports that the steepness of cost inflation varied by builder size. Builders with five or fewer starts saw median material cost increases of 9.1%, compared with just 1.8% for builders with 100 or more starts, reflecting advantages larger firms have in areas like stockpiling and longer-term supplier or contract relationships.
The survey also quantified how widely prices moved, with 72.9% of builders reporting that material costs for the same house rose by up to 15% versus the prior year. HousingWire cites NAHB’s findings that the most common outcome was a 5% to 9.99% cost increase, reported by 28.4% of builders, while 22.4% saw increases of less than 5% and 22.1% reported gains between 10% and 14.99%.
NAHB emphasized that material costs are only one part of the broader affordability challenge for builders. HousingWire adds that the size-related cost gap can affect smaller firms ability to protect margins and remain competitive on price, and may spur strategies such as group purchasing organizations, longer-term vendor contracts, or partnerships with larger operators.